Here’s what market experts and analysts have to say about this move:

Aditya Shah, JST Investments

This means that RBI is now saying that unsecured loans are even more riskier, Shah said.

“The capital that the bank will have to set aside every time they give out loans is higher now. This is negative for all risk-taking NBFCs and banks. This is positive for all risk-averse NBFCs and banks. Kudos to the RBI for making this move.”

Sudip Bandyopadhyay, chairman, Inditrade Capital

“RBI increasing risk weight on consumer credit is definitely negative for banks, as we have seen a significant growth in unsecured personal loan book. RBI has been signalling this since sometime now and was very much in the offing,” Bandyopadhyay said.

According to him, this would mean a negative opening for banks and NBFCs tomorrow.

Ashutosh Mishra, head of institutional equities research, Ashika Group

“The RBI’s decision to raise the risk weight on credit card and consumer loan segments is marginally negative for large private banks and could expedite capital consumption. The increase in credit risk weight on consumer and credit card loans by RBI is likely to accelerate capital consumption for private sector banks that have been particularly aggressive in these segments. Simultaneously, this move is expected to fuel discussions about the potential rise in risk associated with these loan segments for the banks.’’

According to Mishra, while this development holds long-term benefits, it might compel the boards of many banks to reassess their growth strategies in these specific segments.

“Capital level of private bank, in general, look adequate and thus, may not have any short-term impact on the capital raising plan of these banks,” he said.

“In our view HDFC Bank Ltd., ICICI Bank Ltd., Axis Bank Ltd., IDFC First Bank Ltd., and RBL Bank Ltd. are anticipated to be the most impacted by this regulatory adjustment.”

However, he does not foresee significant impact on profitability and asset quality trends for these banks over the next 2-3 quarters.